##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-02517
 TOREADOR RESOURCES CORPORATION
  Delaware(State or other jurisdiction of incorporation)
    
    75-0991164(I.R.S. Employer Identification Number)
 4809 Cole Avenue, Suite 108
Dallas, Texas 75205
 Registrants telephone number, including area code: (214) 559-3933
 þ o
  o þ o
 o þ




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##### 



TOREADOR RESOURCES CORPORATION
 TABLE OF CONTENTS
 PageExplanatory Note about this Report 
    
    
    iPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial
Statements (unaudited) (1)Consolidated Balance Sheets  September 30, 2006 and December 31, 2005
    
    
    1Consolidated Statements of Operations  for the three months ended
September 30, 2006 and 2005
    
    
    2Consolidated Statements of Operations  for the nine months ended
September 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows  for the nine months ended
September 30, 2006 and 2005
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    17Item 3.
    

Quantitative
and Qualitative Disclosure About Market RiskItem 4.
    
    Controls and Procedures
    
    
    30PART II. OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    32Item 3.
    
    Defaults
Upon Senior Securities
    
    
    32Item 6.
    
    Exhibits
    
    
    32SIGNATURES
    
    
    33Rule 13a-14(a) Certification of Chief Executive OfficerRule 13a-14(a) Certification of Chief Financial OfficerRule 13a-14(a) Certification of Chief Accounting OfficerSection 1350 Certification
  
 (1)
    
    As described in Note 1 to the financial statements, the
Company restated its financial statements for the year ended December 31, 2005.




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 September 30,
    
    
    December 31,2006
    
    
    2005(Restated)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,134
    
    
    $
    53,113Restricted cash
    
    
    23,804
    
    
    
    Short-term
investments
    
    
    
    
    
    
    40,000Accounts and notes receivable
    
    
    2,300
    
    
    
    8,162Income taxes receivable
    
    
    4,979
    
    
    
    4,453Other
    
    
    10,213
    
    
    
    6,537Total current assets
    
    
    65,430
    
    
    
    112,265Oil and gas properties, net, using successful efforts
method of accounting
    
    
    227,332
    
    
    
    138,158Advances to and investments in unconsolidated entities
    
    
    2,479
    
    
    
    2,251Goodwill
    
    
    4,244
    
    
    
    4,195Other assets
    
    
    6,382
    
    
    
    4,945$
    305,867
    
    
    $
    261,814LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    49,940
    
    
    $
    19,248Convertible debenture  related party
    
    
    
    
    
    
    810Income taxes payable
    
    
    785
    
    
    
    908Total current liabilities
    
    
    50,725
    
    
    
    20,966Long-term accrued liabilities
    
    
    1,357
    
    
    
    1,410Long-term debt
    
    
    
    
    
    
    5,000Long-term asset retirement obligation
    
    
    4,002
    
    
    
    3,630Deferred income taxes
    
    
    11,721
    
    
    
    12,199Convertible senior notes
    
    
    86,250
    
    
    
    86,250Total liabilities
    
    
    154,055
    
    
    
    129,455Commitments
and contingenciesStockholders equity:Preferred stock, Series A-1, $1.00 par value,
4,000,000 shares authorized; liquidation
preference of $1,800; 72,000 shares issued and
outstanding
    
    
    72
    
    
    
    72Common stock, $0.15625 par value, 30,000,000 shares authorized;16,650,761 and 16,142,824
shares issued and outstanding
    
    
    2,602
    
    
    
    2,522Additional paid-in capital
    
    
    110,338
    
    
    
    108,001Retained earnings
    
    
    40,210
    
    
    
    29,564Accumulated other comprehensive income (loss)
    
    
    1,124
    
    
    
    (3,364
    )Deferred
compensation
    
    
    
    
    
    
    (1,902
    )Treasury stock, at cost, 721,027 shares
    
    
    (2,534
    )
    
    
    (2,534
    )Total stockholders equity
    
    
    151,812
    
    
    
    132,359$
    305,867
    
    
    $
    261,814
  1




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
  Three Months EndedSeptember 30,20052006
    
    
    (restated)Oil and natural gas sales
    
    $
    10,726
    
    
    $
    8,770Operating costs and expenses:Lease operating
    
    
    2,634
    
    
    
    2,112Exploration expense
    
    
    414
    
    
    
    1,232Dry hole and abandonment
    
    
    
    
    
    
    1,382Depreciation, depletion and amortization
    
    
    1,975
    
    
    
    969General and administrative
    
    
    2,395
    
    
    
    1,345Total operating costs and expenses
    
    
    7,418
    
    
    
    7,040Operating income
    
    
    3,308
    
    
    
    1,730Other income (expense):Equity in earnings of unconsolidated investments
    
    
    71
    
    
    
    (7
    )Loss on sale of properties and other assets
    
    
    (11
    )
    
    
    Foreign currency exchange gain
    
    
    2,736
    
    
    
    195Interest
income and expense and other, net
    
    
    545
    
    
    
    215Total other income, net
    
    
    3,341
    
    
    
    403Income before taxes
    
    
    6,649
    
    
    
    2,133Income tax
provision
    
    
    1,188
    
    
    
    782Income from continuing operations
    
    
    5,461
    
    
    
    1,351Income from discontinued operations, net of tax
    
    
    11
    
    
    
    14Net income
    
    
    5,472
    
    
    
    1,365Preferred dividends
    
    
    (40
    )
    
    
    (41
    )Income available to common shares
    
    $
    5,432
    
    
    $
    1,324Basic income
available to common shares per share
    
    $
    0.35
    
    
    $
    0.09Diluted
income available to common shares per share
    
    $
    0.33
    
    
    $
    0.09Weighted average shares outstanding:Basic
    
    
    15,637
    
    
    
    14,543Diluted
    
    
    18,677
    
    
    
    15,907
  2




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 Nine Months EndedSeptember 30,20052006
    
    
    (restated)Revenue:Oil and natural gas sales
    
    $
    30,798
    
    
    $
    22,610Operating costs and expenses:Lease operating
    
    
    7,722
    
    
    
    6,372Exploration expense
    
    
    2,652
    
    
    
    2,037Dry hole and abandonment
    
    
    
    
    
    
    1,382Depreciation, depletion and amortization
    
    
    4,564
    
    
    
    2,902General and administrative
    
    
    7,280
    
    
    
    5,104Total operating costs and expenses
    
    
    22,218
    
    
    
    17,797Operating income
    
    
    8,580
    
    
    
    4,813Other income (expense):Equity in earnings of unconsolidated investments
    
    
    263
    
    
    
    117Gain on sale of properties and other assets
    
    
    640
    
    
    
    12Foreign currency exchange gain
    
    
    1,863
    
    
    
    155Interest
income and expense and other, net
    
    
    1,811
    
    
    
    794Total other income, net
    
    
    4,577
    
    
    
    1,078Income before taxes
    
    
    13,157
    
    
    
    5,891Income
tax provision
    
    
    2,975
    
    
    
    659Income from continuing operations
    
    
    10,182
    
    
    
    5,232Income from discontinued operations, net of tax
    
    
    11
    
    
    
    25Net income
    
    
    10,193
    
    
    
    5,257Preferred dividends
    
    
    (122
    )
    
    
    (644
    )Income
available to common shares
    
    $
    10,071
    
    
    $
    4,613Basic income
available to common shares per share
    
    $
    0.65
    
    
    $
    0.33Diluted
income available to common shares per share
    
    $
    0.63
    
    
    $
    0.31Weighted average shares outstanding:Basic
    
    
    15,488
    
    
    
    13,845Diluted
    
    
    17,316
    
    
    
    15,197
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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Nine Months EndedSeptember 30,20052006
    
    
    (restated)Cash flows from operating activities:Net income
    
    $
    10,193
    
    
    $
    5,257Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    4,564
    
    
    
    2,902Dry holes and abandonments
    
    
    
    
    
    
    1,382Gain on sale of properties and other assets
    
    
    (640
    )
    
    
    (12
    )Deferred income taxes
    
    
    1,151
    
    
    
    6,578Equity in earnings of unconsolidated investments
    
    
    (263
    )
    
    
    (117
    )Stock based compensation
    
    
    1,936
    
    
    
    223Realized gains on foreign currency transactions
    
    
    (1,863
    )
    
    
    (155
    )Change in operating assets and liabilities:Increase
(decrease) in accounts and notes receivables
    
    
    5,336
    
    
    
    (7,795
    )Increase in other assets
    
    
    (5,299
    )
    
    
    (3,795
    )Increase in accounts payable and accrued liabilities
    
    
    30,639
    
    
    
    2,227Decrease in income taxes payable
    
    
    (1,333
    )
    
    
    (1,593
    )Net cash provided by operating activities
    
    
    44,421
    
    
    
    5,102Cash flows from investing activities:Expenditures for property and equipment
    
    
    (93,851
    )
    
    
    (33,853
    )Restricted cash
    
    
    (23,804
    )
    
    
    Acquisition
of Pogo-Hungary
    
    
    
    
    
    
    (8,751
    )Short-term
investments
    
    
    40,000
    
    
    
    Investment in unconsolidated subsidiaries
    
    
    35
    
    
    
    (592
    )Net cash used in investing activities
    
    
    (77,620
    )
    
    
    (43,196
    )Cash flows from financing activities:Borrowings from long-term debt
    
    
    
    
    
    
    6,796Payment for debt issuance costs
    
    
    
    
    
    
    (3,897
    )Repayments of long-term debt
    
    
    (5,000
    )
    
    
    (2,000
    )Proceeds
from issuance of common stock
    
    
    969
    
    
    
    58,646Proceeds from convertible senior notes
    
    
    
    
    
    
    86,250Tax benefit
of stock option exercised
    
    
    1,210
    
    
    
    Payment of preferred dividends
    
    
    (122
    )
    
    
    (144
    )Net cash provided by (used in) financing activities
    
    
    (2,943
    )
    
    
    145,651Net increase (decrease) in cash and cash equivalents
    
    
    (36,142
    )
    
    
    107,557Effects of foreign currency translation on cash and cash
equivalents
    
    
    7,163
    
    
    
    (4,139
    )Cash and cash equivalents, beginning of period
    
    
    53,113
    
    
    
    4,977Cash and cash equivalents, end of period
    
    $
    24,134
    
    
    $
    108,395
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TOREADOR RESOURCES CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1  BASIS OF PRESENTATION
  Restricted cash
  Restatement of Previously Issued Financial Statements
   Capitalization of Interest
 Capitalization of Interest Cost
 Insurance Claim Adjustments
  Foreign
Currency
 Foreign Currency
Translation
  Depletion,
Depreciation and Amortization (DD&A)
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2005As
    
    
    
    
    
    
    AsPreviously
    
    
    As
    
    
    Previously
    
    
    AsReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedOil and natural gas sales
    
    $
    8,770
    
    
    $
    8,770
    
    
    $
    22,348
    
    
    $
    22,610Operating
costs and expenses
    
    
    7,085
    
    
    
    7,040
    
    
    
    17,776
    
    
    
    17,797Operating Income
    
    
    1,685
    
    
    
    1,730
    
    
    
    4,572
    
    
    
    4,813Other Income (expense), net
    
    
    161
    
    
    
    403
    
    
    
    568
    
    
    
    1,078Income before taxes
    
    
    1,846
    
    
    
    2,133
    
    
    
    5,140
    
    
    
    5,891Income tax provision (benefit)
    
    
    782
    
    
    
    782
    
    
    
    659
    
    
    
    659Income from continuing operations
    
    
    1,064
    
    
    
    1,351
    
    
    
    4,481
    
    
    
    5,232Income from discontinued operations, net
of tax
    
    
    14
    
    
    
    14
    
    
    
    25
    
    
    
    25Net Income
    
    
    1,078
    
    
    
    1,365
    
    
    
    4,506
    
    
    
    5,257Preferred dividends
    
    
    (41
    )
    
    
    (41
    )
    
    
    (644
    )
    
    
    (644
    )Income available to common shares
    
    $
    1,037
    
    
    $
    1,324
    
    
    $
    3,862
    
    
    $
    4,613Basic
income available to common shares per share fromContinuing operations
    
    
    0.07
    
    
    
    0.09
    
    
    
    0.28
    
    
    
    0.33Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.07
    
    
    
    0.09
    
    
    $
    0.28
    
    
    
    0.33Diluted
income available to common shares per share fromContinuing operations
    
    
    0.07
    
    
    
    0.09
    
    
    
    0.27
    
    
    
    0.31Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.07
    
    
    
    0.09
    
    
    $
    0.27
    
    
    
    0.31Weighted average shares outstanding:Basic
    
    
    14,679
    
    
    
    14,543
    
    
    
    13,891
    
    
    
    13,845Diluted
    
    
    15,593
    
    
    
    15,907
    
    
    
    14,857
    
    
    
    15,197
 Nine months ended September 30, 2005As previouslyreported


RestatedCash flows from operating
    activities

$
7,677


$
5,102Cash flows from investing
    activities


(50,385
)


(43,196
)Cash flows from financial
    activities


145,651



145,651
 New Accounting Pronouncements
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Fair Value Measurement
   Accounting for Uncertainty in Income Taxes  An Interpretation of
FASB Statement No. 109,
  Accounting for Conditional Asset Retirement
Obligations, an interpretation of SFAS No. 143
 Exchanges of Nonmonetary Assets, an Amendment of
APB Opinion No. 29, Accounting for Nonmonetary Transactions ( SFAS 153)
 Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements
 Whether Mineral Rights Are Tangible or Intangible Assets, Business Combinations, Goodwill and Other Intangible Assets. Interaction of FASB Statements No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, and EITF Issue No. 04-2, Whether Mineral Rights Are Tangible
or Intangible Assets. Application of FASB Statement No. 142,
Goodwill and Other Intangible Assets, to Oil- and Gas-Producing Entities
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NOTE 2  INSURANCE CLAIM ON 2005 BLACK SEA INCIDENTS
  NOTE 3  STOCK-BASED COMPENSATION
   Three Months Ended
    
    Nine Months EndedSeptember 30, 2005
    
    September 30, 2005(restated)
    
    (restated)Income applicable to common shares, as reported
    
    $
    1,324
    
    
    $
    4,613Basic
earnings available to common shares per share as reported
    
    
    0.09
    
    
    
    0.33Diluted earnings available to common shares per share reported
    
    
    0.09
    
    
    
    0.31Pro-forma stock-based compensation costs
under the fair value method, net of related
tax
    
    
    7
    
    
    
    49Pro-forma
income available to common
shares, as under the fair-value method
    
    
    1,317
    
    
    
    4,564Pro-forma
basic earnings available to common shares per share under
the fair-value method
    
    
    0.09
    
    
    
    0.33Pro-forma
diluted earnings available to common shares per share under
the fair-value method
    
    
    0.09
    
    
    
    0.31
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##### Table of Contents



Options granted in2005Dividend yield per share (1)
    
    
    Volatility (2)
    
    
    70.9
    %Risk-free interest rate (3)
    
    
    4.0
    %Expected lives (4)
    
    5 years
 
 (1)
    
    Historically, we have not paid dividends on common shares and do not anticipate doing
so during the expected lives of these options.(2)
    
    We estimated volatility based on historic rates of return on our common stock over
periods similar to the expected lives of the related options.(3)
    
    We estimated the risk free rate based on treasury issues with lives similar to the
expected lives of the related options based on quotes available at or near the dates of
grant of the related options.(4)
    
    We estimated expected lives considering, a) the contractual term of the related
options, b) the average age of options exercised near the date of grant of the related
options and c) our expectation of our stock performance during the contractual period.       WEIGHTEDAVERAGE EXERCISESHARES
    
    
    PRICEOutstanding at January 1, 2006
    
    
    858,940
    
    
    $
    5.07Granted
    
    
    
    
    
    
    Exercised
    
    
    (173,070
    )
    
    
    (4.83
    )Forfeited
    
    
    
    
    
    
    Outstanding at September 30, 2006
    
    
    685,870
    
    
    
    5.10Exercisable at September 30, 2006
    
    
    672,536
    
    
    $
    4.87
 8




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Grant-DateShares
    
    
    Fair ValueNon-vested at January 1, 2006
    
    
    114,560
    
    
    $
    20.10Shares granted
    
    
    211,075
    
    
    
    29.03Shares vested
    
    
    (34,864
    )
    
    
    (19.19
    )Shares forfeited
    
    
    (300
    )
    
    
    (31.42
    )Non-vested
at September 30, 2006
    
    
    290,471
    
    
    $
    26.69
 NOTE 4  EARNINGS PER COMMON SHARE
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    
    
    
    
    20052006
    
    
    (restated)
    
    
    2006
    
    
    (restated)(in thousands, except per share data)Basic
earnings available to common shares per share:Numerator:Net income
    
    $
    5,472
    
    
    $
    1,365
    
    
    $
    10,193
    
    
    $
    5,257Less: dividends on preferred shares
    
    
    40
    
    
    
    41
    
    
    
    122
    
    
    
    644Income available to common shares
    
    $
    5,432
    
    
    $
    1,324
    
    
    $
    10,071
    
    
    $
    4,613Denominator:Common shares outstanding
    
    
    15,637
    
    
    
    14,543
    
    
    
    15,488
    
    
    
    13,845Income per share available to common shares
    
    $
    0.35
    
    
    $
    0.09
    
    
    $
    0.65
    
    
    $
    0.33Diluted earnings per share:Numerator:Net income
    
    $
    5,472
    
    
    $
    1,365
    
    
    $
    10,193
    
    
    $
    5,257Plus: interest on convertible debt
    
    
    679
    
    
    
    11
    
    
    
    685
    
    
    
    38Less: dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563Income available to common shares
    
    $
    6,151
    
    
    $
    1,376
    
    
    $
    10,878
    
    
    $
    4,732
 10




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    
    
    
    
    20052006
    
    
    (restated)
    
    
    2006
    
    
    (restated)(in thousands, except per share data)Denominator:Common shares outstanding
    
    
    15,637
    
    
    
    14,543
    
    
    
    15,488
    
    
    
    13,845Common stock options, warrants and restricted stock
    
    
    575
    
    
    
    751
    
    
    
    671
    
    
    
    851Conversion of preferred shares
    
    
    450
    
    
    
    450
    
    
    
    450
    
    
    
    300Conversion of 5.0% notes payable
    
    
    2,015
    
    
    
    
    (1)
    
    
    672
    
    
    
    
    (1)Conversion of 7.85% notes payable
    
    
    
    (2)
    
    
    
    (2)
    
    
    
    (2)
    
    
    
    (2)Conversion of debenture
    
    
    
    (2)
    
    
    163
    
    
    
    35
    
    
    
    201Diluted shares outstanding
    
    
    18,677
    
    
    
    15,907
    
    
    
    17,316
    
    
    
    15,197Income per share available to common shares
    
    $
    0.33
    
    
    $
    0.09
    
    
    $
    0.63
    
    
    $
    0.31
 
 (1)
    
    The 5% notes payable were issued September 27, 2005 and September 30,
2005. The conversion of these securities would result in the inclusion of 174,240 and 58,719 of common shares
for the three and nine months ended September 30, 2005, respectively.(2)
    
    The 7.85 % notes payable were converted to common stock in January 2005. NOTE 5  COMPREHENSIVE INCOME (LOSS)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(restated)
    
    
    
    
    
    
    (restated)Net income
    
    $
    5,472
    
    
    $
    1,365
    
    
    $
    10,193
    
    
    $
    5,257Foreign currency translation adjustment
    
    
    9,576
    
    
    
    1,912
    
    
    
    4,488
    
    
    
    (13,918
    )Comprehensive income (loss)
    
    $
    15,048
    
    
    $
    3,277
    
    
    $
    14,681
    
    
    $
    (8,661
    )
 NOTE 6  LONG-TERM DEBT
 Convertible Senior Notes due October 1, 2025
   11




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Revolving Line of Credit with Natexis Banques Populaires
  Revolving Line of Credit with Texas Capital Bank, N.A.
  Convertible Subordinated Notes
  12




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##### Table of Contents



Convertible Debenture
  Interest Payments
  NOTE 7  ASSET RETIREMENT OBLIGATIONS
  2006
    
    
    2005RestatedAsset retirement obligation January 1
    
    $
    3,630
    
    
    $
    3,291Asset retirement accretion expense
    
    
    372
    
    
    
    104Property additions
    
    
    
    
    
    
    170Foreign currency translation adjustment
    
    
    
    
    
    
    65Asset retirement obligation at September 30
    
    $
    4,002
    
    
    $
    3,630
 NOTE 8  GEOGRAPHIC OPERATING SEGMENT INFORMATION
   13




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Three Months Ended September 30, 2006UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    1,896
    
    
    $
    6,834
    
    
    $
    1,200
    
    
    $
    796
    
    
    $
    
    
    
    $
    10,726Costs and expenses
    
    
    3,097
    
    
    
    3,021
    
    
    
    457
    
    
    
    1,135
    
    
    
    (292
    )
    
    
    7,418Operating income (loss)
    
    $
    (1,201
    )
    
    $
    3,813
    
    
    $
    743
    
    
    $
    (339
    )
    
    $
    292
    
    
    $
    3,308
 Three Months Ended September 30, 2005 (restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    1,979
    
    
    $
    5,962
    
    
    $
    829
    
    
    $
    
    
    
    $
    
    
    
    $
    8,770Costs and expenses
    
    
    2,321
    
    
    
    2,293
    
    
    
    2,183
    
    
    
    70
    
    
    
    173
    
    
    
    7,040Operating income (loss)
    
    $
    (342
    )
    
    $
    3,669
    
    
    $
    (1,354
    )
    
    $
    (70
    )
    
    $
    (173
    )
    
    $
    1,730
 Nine Months Ended September 30, 2006UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    5,389
    
    
    $
    21,564
    
    
    $
    3,049
    
    
    $
    796
    
    
    $
    
    
    
    $
    30,798Costs and expenses
    
    
    8,898
    
    
    
    9,770
    
    
    
    1,563
    
    
    
    1,348
    
    
    
    639
    
    
    
    22,218Operating income (loss)
    
    $
    (3,509
    )
    
    $
    11,794
    
    
    $
    1,486
    
    
    $
    (552
    )
    
    $
    (639
    )
    
    $
    8,580
 Nine Months Ended September 30, 2005 (restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    5,506
    
    
    $
    14,998
    
    
    $
    2,106
    
    
    $
    
    
    
    $
    
    
    
    $
    22,610Costs and expenses
    
    
    7,399
    
    
    
    6,791
    
    
    
    3,348
    
    
    
    86
    
    
    
    173
    
    
    
    17,797Operating income (loss)
    
    $
    (1,893
    )
    
    $
    8,207
    
    
    $
    (1,242
    )
    
    $
    (86
    )
    
    $
    (173
    )
    
    $
    4,813
 Total Assets (1)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalSeptember 30, 2006
    
    $
    34,347
    
    
    $
    88,110
    
    
    $
    153,863
    
    
    $
    15,591
    
    
    $
    13,956
    
    
    $
    305,867September 30, 2005
(restated)
    
    $
    128,128
    
    
    $
    60,733
    
    
    $
    48,137
    
    
    $
    3,736
    
    
    $
    9,656
    
    
    $
    250,390
 
 (1)
    
    Total consolidated assets reflect the effect of intersegment eliminations. NOTE 9  INCOME TAXES
    14




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Note 10  Subsequent Event
 Insurance
Claims
   Notice of Default
      15




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New
Secured Revolving Facility
     16




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Nasdaq
Violation
  
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  DISCLOSURES REGARDING FORWARD-LOOKING STATEME
  Restatement
for Previously Issued Financial Statements
   17




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EXECUTIVE OVERVIEW
    
    
    Operating income of $8.6 million, compared with $4.8 million for the nine months ended
September 30, 2005,
    
    Production of 535 MBOE, compared with 462 MBOE for the nine months ended September 30,
2005,
    
    Cash flows from operating activities of $44.4 million,
compared with $5.2 million for
the nine months ended September 30, 2005, and
    
    Installation of the first tripod on the Akkaya structure in the Black Sea.
 LIQUIDITY AND CAPITAL RESOURCES
     18




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Liquidity
  Senior Debt
  19




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New
Secured Revolving Facility
    20




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##### Table of Contents



Convertible Senior Notes
  Preferred Stock
  Dividend and Interest Requirements
  Private Placement
  21




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Contractual Obligations
  CRITICAL ACCOUNTING POLICIES
  Successful Efforts Method of Accounting
   22




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Reserve Estimates
  Impairment of Oil and Natural Gas Properties
  23




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##### Table of Contents



Future Development and Abandonment Costs
   Income Taxes
   24




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RESULTS OF OPERATIONS
 COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
  For the Three Months Ended September 30,2006
    
    
    2005ProductionOil (MBbls):United States
    
    
    16
    
    
    
    15France
    
    
    104
    
    
    
    105Romania
    
    
    2
    
    
    
    Turkey
    
    
    20
    
    
    
    16Total
    
    
    142
    
    
    
    136Gas (MMcf):United States
    
    
    121
    
    
    
    135France
    
    
    
    
    
    
    Romania
    
    
    192
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    313
    
    
    
    135MBOE:United States
    
    
    36
    
    
    
    38France
    
    
    104
    
    
    
    105Romania
    
    
    34
    
    
    
    Turkey
    
    
    20
    
    
    
    16Total
    
    
    194
    
    
    
    159Average PriceOil ($/Bbl):United States
    
    $
    65.56
    
    
    $
    58.18France
    
    
    65.94
    
    
    
    57.00Romania
    
    
    50.65
    
    
    
    Turkey
    
    
    60.74
    
    
    
    51.04Total
    
    $
    64.91
    
    
    $
    56.42Gas ($/Mcf):United States
    
    $
    6.04
    
    
    $
    8.20France
    
    
    
    
    
    
    Romania
    
    
    3.50
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    $
    4.48
    
    
    $
    8.20$/BOE:United States
    
    $
    49.33
    
    
    $
    52.81France
    
    
    65.94
    
    
    
    57.00Romania
    
    
    23.12
    
    
    
    Turkey
    
    
    60.74
    
    
    
    51.04Total
    
    $
    54.71
    
    
    $
    55.39
 Revenue
 Oil and natural gas sales
   25




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Costs and expenses
 Lease operating
  Exploration expense.
  Dry hole and abandonment
  Depreciation, depletion and amortization
  General and administrative
  Other income and expense
  Income available to common shareholders
  26




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Other comprehensive income
   September 30, 2006
    
    
    September 30, 2005Euro
    
    $
    1.2660
    
    
    $
    1.2042New Turkish Lira
    
    $
    0.6624
    
    
    $
    0.7407Romania Lei
    
    $
    0.00004
    
    
    $
    0.00003Hungarian Forint
    
    $
    0.0046
    
    
    $
    0.0048
 COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
  For the Nine Months Ended September 30,2006
    
    
    2005ProductionOil (MBbls):United States
    
    
    45
    
    
    
    45France
    
    
    341
    
    
    
    301Romania
    
    
    2
    
    
    
    Turkey
    
    
    54
    
    
    
    49Total
    
    
    442
    
    
    
    395Gas (MMcf):United States
    
    
    369
    
    
    
    396France
    
    
    
    
    
    
    Romania
    
    
    192
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    561
    
    
    
    396MBOE:United States
    
    
    106
    
    
    
    112France
    
    
    341
    
    
    
    301Romania
    
    
    34
    
    
    
    Turkey
    
    
    54
    
    
    
    49Total
    
    
    535
    
    
    
    462Average PriceOil ($/Bbl):United States
    
    $
    62.97
    
    
    $
    51.32France
    
    
    63.26
    
    
    
    49.88Romania
    
    
    50.65
    
    
    
    Turkey
    
    
    56.83
    
    
    
    43.06Total
    
    $
    62.38
    
    
    $
    49.20Gas ($/Mcf):United States
    
    $
    6.25
    
    
    $
    7.04France
    
    
    
    
    
    
    Romania
    
    
    3.50
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    $
    5.31
    
    
    $
    7.04$/BOE:United States
    
    $
    48.24
    
    
    $
    45.97France
    
    
    63.26
    
    
    
    49.88Romania
    
    
    23.12
    
    
    
    Turkey
    
    
    56.83
    
    
    
    43.06Total
    
    $
    57.05
    
    
    $
    48.21
 27




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##### Table of Contents



Revenue
 Oil and natural gas sales
   Costs and expenses
 Lease operating
  Exploration expense.
  Dry hole and abandonment
  Depreciation, depletion and amortization
  General and administrative
  28




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##### Table of Contents



Other income and expense
  Net income available to common shareholders
  Other comprehensive income
  September 30, 2006
    
    
    September 30, 2005Euro
    
    $
    1.2660
    
    
    $
    1.2042New Turkish Lira
    
    $
    0.6624
    
    
    $
    0.7420Romania Lei
    
    $
    0.00004
    
    
    $
    0.00003Hungarian Forint
    
    $
    0.0046
    
    
    $
    0.0048
 
 Item 3.
Quantitative and Qualitative Disclosure About Market Risk
  29




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ITEM 4  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   
    
    We did not maintain an effective control environment and our financial and accounting
organization was not adequate to support our financial reporting requirements. The
involvement of corporate personnel in the reporting of foreign transactions and operations
was not sufficient to accurately capture and record such activity and we did not maintain a
sufficient complement of personnel with an appropriate level of accounting knowledge,
experience and training in the application of generally accepted accounting principles
consistent with the level and complexity of our operations.
    
    Our accounting and financial reporting systems and procedures were not sufficiently
designed to ensure consistent or complete application of our accounting policies or to
prepare financial statements in accordance with generally accepted accounting principles.
This includes not only the sufficiency of our review of sensitive calculations,
reconciliations and spreadsheets but also the preparation and processing of financial
accounting information.
 
    
    During the year-end audit several errors were found in
spreadsheets. We believe that the failure of the review process to
detect the errors constituted a material weakness.
    
    Our review of the system of controls surrounding the
information technology system revealed that 1) several employees
could prepare and post entries, leading to a segregation of duties
issue; 2) there was inadequate security over the proper storage
of offsite back-up tapes and the periodic review of back-up tapes to
ensure their accuracy; 3) security logs generated by the system
were not periodically reviewed and terminated employees were not
disconnected from the system in a timely manner; and 4) several
authorized users of our accounting system had access to modules that
create additional segregation of duties issues.
 30




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Changes in Internal Control over Financial Reporting
   
    
    Improving the computerized integrated financial reporting system. This will automate
the manual processes that are causing errors in spreadsheets.
    
    Hiring additional experienced accounting staff to allow for improved segregation of
duties and a more thorough review, by senior financial officers, of the financial
statements and underlying supporting documentation.
    
    Providing additional training to our accounting staff and acquiring
other accounting resources to improve our ability to report our financial statements in
accordance with generally accepted accounting principles.
    
    Formally documenting our accounting policies and procedures.
 31




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##### Table of Contents



PART II. OTHER INFORMATION
 Item
1A. Risk Factors
 Failure to maintain effective internal controls could have a
material adverse effect on our operations and stock price.
    Item 3
 Defaults Upon Senior Securities
  
 ITEM 6  EXHIBITS
 ExhibitNumber
    
    Description
    
    Incorporation by Reference10.1
    
    Michael J. FitzGerald Change in
Control Agreement dated November 8, 2006
    
    Incorporated by reference from
Exhibit 10.1 to Current Report on Form 8-K filed on
November 15, 2006.10.2
    
    Loan and Guarantee Agreement dated
December 28, 2006 by and among Toreador Resources Corporation,
as Guarantor, Toreador Turkey Ltd, as Borrower and Guarantor,
Toreador Romania Ltd, as Borrower and Guarantor, Madison Oil France
SAS, as Borrower and Guarantor, Toreador Energy France S.C.S., as
Borrower and Guarantor, Toreador International Holding L.L.C., as
Guarantor, and International Finance Corporation
    
    Incorporated by reference from
Exhibit 10.1 to Current Report on Form 8-K filed on
January 4, 2007.31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer
    
    Filed Herewith31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer
    
    Filed Herewith31.3
    
    Rule 13a-14(a) Certification of Chief Accounting Officer
    
    Filed Herewith32.1
    
    Section 1350 Certification of
Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer
    
    Filed Herewith
 32




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TOREADOR RESOURCES CORPORATION,
RegistrantJanuary 14, 2007
    /s/ G. Thomas Graves IIIG. Thomas Graves IIIPresident and Chief Executive Officer January 14, 2007
    /s/ Douglas W. WeirDouglas W. WeirSenior Vice President and Chief Financial Officer January 14, 2007
    /s/ Charles J. CampiseCharles J. CampiseVice President  Accounting and Chief Accounting
Officer 33